FSA wants power to block hostile bank takeovers

Lord Adair Turner, chairman of the FSA, may ask the government for the power to block hostile takeovers in the banking sector to prevent aggressive takeovers from disrupting financial stability.

In an interview with Dow Jones newswires, Turner said “aggressive, contested” takeovers do not allow for as much due diligence as agreed takeovers, adding it might be an acceptable risk in non-banking sectors but not in the financial sector.

He says: “Whereas you can see the primary responsibility of the board of directors of a non-banking company being to maximise shareholder value and to take risks, the fact is that for banks the downside to a society of getting it wrong is a hugely important factor.” (article continues below)

Turner said he could make the request when the FSA publishes a synthesis report on its investigation in Royal Bank of Scotland and the events that led to its bailout, which he said would be by April.